New home, but is this living too close to the edge financially?

[massiopler]

I recently made the decision to buy alone (became single in February and have struggled to get my confidence back and control in my life). I am 28.

I have worked out that if I go ahead with this plan, for the first year, I will be left with about 110 pounds a month after paying out for everything - mortgage, food, bills, car, travel to work etc. After the first year, my salary is due to increase, meaning I should be left with around 350-400 a month. If I carry on renting between now and then, (ie to wait until the pay increase before I buy), I will be spending the same on rent, but will obviously not have the pressure of home-owning and having the liability for it. If I were to buy and then lose my job in the next year and not get the pay rise, I would take a job in the area and would be able to pay the mortgage which ironically is low (around 450 a month), even on a small salary.

I am just worried about the initial time frame where I will be left with very little month to month. Is this a silly thing to do, or do people do it to get on the ladder and then things settle down?

Thanks.

You will be fine. But yes a credit card for emergencies would be a good idea.

Out of the £110 per month I would immediately transfer say £50 to an easy access savings account. You can use that money if you need to buy if you can manage on the remaining £60 you'll have a small savings fund building up.

Do you ahve any other debt (credit cards, store cards etc)? Are your family supportive - could they sub you a month if the alternative was defaulting on your mortgage?

I would do it. You sound organised and sensible. You also have a great motivation for throwing yourself into work to secure any promotions or bonuses going.

Owning your own home, single at 28 is a GREAT place to be.

buy but

And if a washing machine dies you can do interest free, credit card, laundry mat or second hand machine. There's always options!

It is only for 1 year and you could pick up a job at weekends. I don't know which area you are from but in 1 year if you wait your mortgage maybe larger as the price of the house you like maybe more. Definitely go for it.

Do it. Definitely do it. Definitely. £110 a month left over is fine. You'll find ways to save/earn more.

If you don't, you'll be paying the sane amount of money out ANYWAY on rent, with nothing to show for it later. Which is really daft! :-)

Don't start looking at borrowing money!!!! That's an easy trap to fall into. Beds, sofas, etc are always on Ebay for pennies.

Thanks so much for all the advice. Yes family are supportive but I would hate to ask them for mortgage repayment - they have supported me a little with the deposit already.

I want to do it but I have never lived so close to the edge before and it feels daunting. So many people are part of a couple and I feel more scared because of that - I don't have that security and it doesnt feel very nice!

But that's not a reason not to do it...

Oh and I have an overdraft but no other formal 'debt' as such.

I wouldn't get furniture using a loan though. Put the word out and you'd be surprised how many people have furniture they want to pass on/get rid of, or try your nearest charity furniture shop (our local British Heart Foundation one has some nice stuff)

You can get lots of IKEA double beds in the £150-250 range.

Getting a Saturday job in a local shop would probably provide you with £200 extra a month. Try to get it in a DIY shop you can buy useful home-owning stuff on discount! Or a supermarket, to reduce your food bills.

Please do it. You might never find such an affordable mortgage/nice property again. And remember, the new tight mortgage criteria mean that it is VERY UNLIKELY you'd be offered a mortgage you couldn't affird.

Have you spoken to a mortgage provider? Are they willing to lend you the money?

It's very hard nowadays to get a mortgage. They have to undertake affordability checks which are very rigid. Speak to a mortgage advisor, building society or bank first to see if you can get the mortgage in the first place.

I echo a PP> Can you get 2 rooms and have a lodger? That's an extra 400 a month or so.

The MMR rules will mean the bank will test your finances for a 7% mortgage rate and make sure the mortgage does not go above about ~40% of your take-home.

Is it a fixed rate mortgage & over what period. Bear in mind interest rate rises not only now but in x years when you need to remortgage as your increased salary could get eaten up. As long as you have considered this, definitely go for it. It's worth things being tight for 12 months I think. Everyone is really skint when they buy first home in my experience

And I have my first ever mortgage now (in my 40s!) and I KNOW how scary it is. But it's much safer to have money tied up in property than just in a bank.

Whereabouts in the country are you?

If you're in a city you could potentially do airbnb to raise money. So you could take a house-sit somewhere in your area and rent out your flat for that time.

Buy used furniture.
You are going to find that you can live on very little if you have to for a year or so.

You say you would spend the same on mortgage as on rent yet you would
have to rent anyway. Your situation will be similar. You can rent the whole flat if you have to. Perhaps cover cost of mortgage this way if necessary.
I wouldn't hesitate.

When I moved into my first London property I only had a cooker, a sleeping bag, and a couch which doubled as a bed. Those were the days - they were glorious!

You can check local furniture recycling places as well for good bargains on furniture. Let family and friends know you're looking and they may either have some to give you or know someone who does. Starting out with secondhand furniture is no big deal - that gives you time to save up over the next few years and replace it slowly with new furniture that you can choose carefully, rather than grabbing something quick on loan and paying through the nose for it.

I agree with the poster that said to go over your budget and see where you can cut as well, and any that you can, pop straight into savings.

Before anyone takes over stretches themselves, I would strongly recommend reading the following and make sure they understand the points being made:

ftalphaville.ft.com/2014/02/19/1776182/affordability-backwards/

The more I think about this the more I think you might not get the mortgage based on the affordability criteria - they do, as a pp say, check that you can afford the payments should rates go up... And I know the rules tightened up recently. I'm not sure where to point you to for advice on that though - Money Saving Expert forums?

Go for it

As for furniture I picked up a beautiful
Leather sofa on a local Facebook selling site for £50 so it might be worth looking at these, gum tree etc rather than putting yourself into another credit agreement. It depends on whether you have enough savings, or you might find family and friends might have furniture they can give you?

I would do it. DH and I felt like we were really stretching ourselves when we first bought our place and some things happened (raises etc) and now we have a significant amount of free money every month, plus we are making over payments on the mortgage. It is daunting but my DH still kicks himself for not buying a place near where he lived in central London 5 years ago when he first moved. If he had, we could have sold it and had about £300k in the bank most of our friends talk about regrets of not buying sooner and taking a leap of faith, none have regretted buying.

And YY to cheap furniture. Our furniture is a mix of some high street, mostly eBay (and the odd charity shop piece too) and all of our friends have commented that our place looks like it's from house and garden magazine, and we haven't had to spend very much at all. It's worth living in an empty space for a while and collecting pieces you love as you go instead of racing out to IKEA.